5 Tips for Making Performance Measurement Work for Your Nonprofit

Nonprofits are often asked by funders to report on their performance. In response, we develop performance measures to track, on an ongoing basis, if what we are doing is having the desired effect.

There are so many things that could be measured in our everyday interactions, such as number of people who attend our workshops or the amount of money raised by our fundraising efforts. There are also some handy financial ratios that can be helpful in understanding our overall financial performance. These things are important but they don’t tell the full story of our impact.

This is why we see an increasing emphasis on identifying our outcomes. They communicate our social mission and tell our funders and our communities the change we intend to make with our work.

The challenge however, is that there is no ‘one size fits all’ solution when it comes to defining outcomes and developing ways to measure them. Our missions, budget, size and programs vary, and so what and how we measure performance needs to reflect our unique identity. Some organizations are “drowning in data” , measuring too many things without knowing which measures will help them assess progress toward their goals. This is risk for well-established nonprofits with diverse funders who can have numerous and sometimes competing expectations about program or organizational performance. We can get stuck in measures that no longer help us illuminate our path toward fulfilling our mission. Instead, we can forget why we’re collecting this data and allow the measures themselves to define what is meaningful rather than our vison and mission.

The Nature Conservancy realized in the early 1990’s that their measurement tactics were not aimed at their core ‘why.’ They measured dollars raised and acres of land saved but these metrics didn’t help them understand their progress on their ultimate mission, which is to preserve the diversity of life on Earth. They realized they needed to look at issues affecting the larger ecosystem in which their land preserves were located to know if they were having positive impact on diversity of life. In response, they developed measures to assess the biodiversity health of their sites and to assess the levels of threat to their conservation targets. Changing their performance measures helped The Nature Conservancy assess their true progress toward achieving their mission. It also makes it clear what they value; that their core purpose is biodiversity, not beautification.

Whether we’re reviewing our performance measures or diving into performance measurement for the very first time, it can feel like a daunting process. Here are five tips to make it easier.

1. Beginning with the end

Can we describe in one sentence, the impact our organizations intend to make? Some of us can look to our organization’s theory of change for this. We can also use our mission statement to help clarify our definition of success. Being able to clearly explain the change we want to make with our work can guide us in deciding what to measure. More importantly, however, is that everyone in senior leadership agree on the same intended impacts. Building this agreement with senior leadership at the start can have the additional benefit of fueling curiosity about what new insights will be gathered about organizational performance.

2. Linking measurement to outcomes

Outcome measurement is the secret sauce of nonprofit performance. Outcomes give tangible form to even our loftiest visions for change. Defining outcomes and setting targets for their achievement allows us to measure our progress in a real and visible way. This is particularly important for those of us from small nonprofits with modest budgets as it enables us to not only demonstrate our effectiveness but also to make the most of our resources. If viewed as a tool for learning and growth, outcome measures can give timely feedback on aspects of our delivery or structures that need to change in order to optimize our impact.

3. Identifying our motivation to measure

There are many reasons why performance measurement could be important for our organizations. Is it for the purpose of being accountable to our funder? Is it to demonstrate transparency to our clients and stakeholders? To assess the cost-effectiveness of our program delivery? Identifying the primary drivers of measurement can help us choose the data we will need to collect to meet our particular performance measurement needs.

4. Making it sustainable

Since a cornerstone of performance measurement is that it is done consistently over time, our performance measurement plan needs to be realistic and practical so that it is within our capacity to sustain. All aspects of a program or organization can be measured, so our plan needs clearly define what will be measured, how it will be done and who is responsible for doing it.

5. Showing what we value

As this quote from the civil rights movement explains so concisely, “Don’t tell me what you believe. Show me what you do, and I will tell you what you believe.” This too can be said for performance measurement. When the Nature Conservancy aligned their measurement with their mission, it showed that they were serious about preserving biodiversity. It was a brave choice as it would reveal the complexities of their work and make it more difficult to demonstrate success. It is ultimately, however, a reflection of their values in action and allows stakeholders to engage more deeply with their cause.

So too with us, if equity is part of our organization’s identity, we should include it in our performance criteria. If part of our mission is to ensure inclusivity, our performance measurement plan will honour this value by inviting our community to be an active part of the process. If transparency is at our core, we need to consider if our performance measurement activities will be designed to capture unexpected results too, whether positive or negative, and how we will communicate our findings.

Performance measurement, while new to some of us, can be a great asset. When planned for maximum effectiveness, it can provide us with valuable insights that motivate us to lean in to our missions and be the best we can be for our communities.

Until next time,

Liz

This week’s blog was written by Liz Dennis. As PLC’s Evaluation Manager, Liz brings her passion and 10 years’ experience in the nonprofit sector to PLC as the first point of contact with clients. She also works with clients to help them understand the impact of their work with PLC through evaluation and story. Connect with Liz at ldennis@peelleadershipcentre.org.

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